Pre-Payment Penalties and Privileges Penalties For the majority of mortgages, borrowers are charged a penalty if they wish to pay off all or sometimes part of the mortgage before the end of the term. The normal pre-payment penalty is typically the greater of three months' interest or the Interest Rate Differential (IRD: the amount of interest at the mortgage rate vs. the current interest rate due for the balance of the term). To calculate your IRD penalty do the following: Step 1: Review your most recent mortgage statement. Note the interest rate and the time left on the mortgage and the mortgage balance. For example, if you are in a 5-year mortgage that you have been making payments on for 2 years, you will still have 3 years or 36 payments left on the mortgage. Prepayment Privileges Most mortgage products offer/allow prepayment privileges including annual lump sum contributions and or an increase in the mortgage payments (up to a certain percent: (5% - 25% depending on the lender). Call us today to get started with a Mortgage Solution that fits your lifestyle, Telephone (416)855-5952. |